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U.K. Homes Face ‘Unprecedented’ Drop
amcluesent
Posts: 9,425 Forumite
U.K. house prices face an “utterly unprecedented” decline of 40 percent in nominal terms, as interest rate cuts fail to slow the momentum of decline, according to analysts at Sanford C. Bernstein in London.
“A 40 percent nominal house price fall is utterly unprecedented in the U.K.,” analysts led by Bruno Paulson wrote in an e-mailed note to investors today. Prices have already declined 20 percent, it said.
Past property price crashes in Britain were largely masked by the effects of inflation. In the 1970s, the fall in the house price-to-income ratio to 3.1 from 4.4 “was achieved without a single negative quarter for nominal house prices, thanks to the 25 percent inflation rate,” wrote London-based Paulson. Inflation also eased the effects of the 1990s slump.
“The key difference this time is that more of the drop in the income ratio actually hits nominal prices” because inflation is now lower, the report added.
U.K. housing sales dropped to the lowest since at least 1978 last month as the recession pushed down prices, according to the Royal Institution of Chartered Surveyors, while the economy suffered its worst contraction since 1980 in the last three months of 2008.
The British house price-to-income ratio will decline to 3.2 times from 5.8 times, the note added.
"I have put an end to boom and bust" - Clown
“A 40 percent nominal house price fall is utterly unprecedented in the U.K.,” analysts led by Bruno Paulson wrote in an e-mailed note to investors today. Prices have already declined 20 percent, it said.
Past property price crashes in Britain were largely masked by the effects of inflation. In the 1970s, the fall in the house price-to-income ratio to 3.1 from 4.4 “was achieved without a single negative quarter for nominal house prices, thanks to the 25 percent inflation rate,” wrote London-based Paulson. Inflation also eased the effects of the 1990s slump.
“The key difference this time is that more of the drop in the income ratio actually hits nominal prices” because inflation is now lower, the report added.
U.K. housing sales dropped to the lowest since at least 1978 last month as the recession pushed down prices, according to the Royal Institution of Chartered Surveyors, while the economy suffered its worst contraction since 1980 in the last three months of 2008.
The British house price-to-income ratio will decline to 3.2 times from 5.8 times, the note added.
"I have put an end to boom and bust" - Clown
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Comments
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I hope so. We wont be able to buy anything for about another year and I'd hate to miss the bus.0
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Saw a dead badger on the motorway before.
That was a first.Hi, we’ve had to remove your signature. The one where you showed us Dithering Dad is a complete liar. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE Forum Team0 -
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scousethife wrote: »Saw a dead badger on the motorway before.
That was a first.
What was the result of the accident enquiry , was it speeding?Have you tried turning it off and on again?0 -
This is their previous paper when they were predicting 25%. The more recent research note doesn't seem to be on their website.
Will Falling House Prices Undermine the UK Economy and Banks?, September 20080 -
I hope so. We wont be able to buy anything for about another year and I'd hate to miss the bus.
Another year!!! !!!!!! wait until 2035 then you can get the right bus at the bottom of the market. House prices will be so low that they will have to reintroduce the halfpenny to pay for them. And don't even talk about flats - these you will have to pay the council to take them away or flytip them on old house development which will be wasteland sites. In the meantime get on the other bus. :jWhen the bloody hell is nelly coming back?0 -
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Lets fact it, not one of them got it right about this downturn happening in the first place, why should anyone believe the new predictions will be any better.0
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